Capital One 2006 Annual Report Download - page 137
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures.
(a) Disclosure Controls and Procedures
The Corporations management carried out an evaluation of the effectiveness of the design and operation of the Corporations
disclosure controls and procedures as of December 31, 2006 pursuant to Exchange Act Rules 13a-15. These disclosure
controls and procedures are the responsibility of the Corporations management. Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective
in alerting them in a timely manner to material information relating to the Corporation (including consolidated subsidiaries)
required to be included in the Corporations periodic filings with the Securities and Exchange Commission. The Corporation
has established a Disclosure Committee consisting of members of senior management to assist in this evaluation.
(b) Internal Controls over Financial Reporting
Managements Report on Internal Control over Financial Reporting is included in Item 8 on page 115 and is incorporated by
reference herein.
(c) Changes in Internal Control Over Financial Reporting
On August 5, 2005, the Corporation entered into a processing services agreement with Total System Services, Inc. (TSYS)
pursuant to which the Corporation would (i) convert the substantial majority of its credit card account portfolios to TSYS
TS2 transaction and account processing platform; and (ii) transition to TSYS call center desktop platform and TSYS
rewards platform. In July 2006, the Corporation began the initial stage of its conversion to TSYS by converting its small
business credit card portfolio and rewards platform to the TSYS systems. In October 2006, the Corporation completed its
second and most significant stage of the conversion to TSYS, and the Corporation is now operating a substantial majority of
its credit card portfolio on TSYS systems. Contractually, TSYS is required to comply with all laws applicable to its activities
and is required to undertake measures requested by the Corporation that assist the Corporation in complying with all
applicable laws, including laws requiring maintenance of an appropriate control environment.
Management believes that this conversion to the TSYS systems platforms constitutes a material change in the Corporations
internal control environment. Both prior to and following the transfer of activities to TSYS, management assessed the
effectiveness of the Companys internal controls over financial reporting related to the Companys card processing, call
center desktop and rewards platforms. Based on testing and planning, management continues to believe that its internal
controls over financial reporting are adequate.
In addition, on December 1, 2006, the Company completed the acquisition of North Fork Bancorporation, Inc. As permitted
by the SEC under the current year acquisition scope exception, managements assessment of the effectiveness of the internal
control over financial reporting excludes the evaluation of the internal controls over financial reporting of North Fork
Bancorporation and its subsidiaries. However, the completion of this acquisition has expanded the Companys internal
control environment.
During the quarter ended December 31, 2006, the changes as described above are the only changes in the Companys internal
control over financial reporting that have materially affected or are reasonably likely to materially affect, the Companys
internal control over financial reporting.